Thread by @trengriffin

1/ "In a networked world, mayhem in one market spreads instantaneously to all others..."

Mandelbrot wrote this previous sentence in 2004. amazon.com/dp/0465043577/

The world is vastly more "networked" today and will continue to get more networked.

2/ With each ratchet up in the networking of the world, this phenomenon is magnified:

"people almost never make decisions independently." nytimes.com/2007/04/15/mag…

The world is more complex than ever.

Some people are bewildered when something like a five sigma event happens.

3/ Every increase in the ability of signals from one source to reach others who can resignal creates more feedback loops that are ever more powerful.

The bumper sticker that said “Shit happens” should now say:

“Shit happens faster and at far greater often nonlinear scale."

4/ When people ask me if today feels like 1999-2000 I say: "Only in the sense that there are high levels of uncertainty and ignorance. Two examples: feedback loops are stronger and the Fed and other central banks are willing to do things now that they weren't willing to do then."

5/ Charlie Munger is right that if you feel uncertain about what happens next given current conditions "your brain is working correctly." The era we are in now is new in many ways (eg, competition levels are higher and money is available for the right teams like never before.)

6/ Some teams did rather famously raise and spend loads of money in the late 1990s and 2000, but several key factors today seem bigger and broader. The skill levels, capital available and level of competition all seem higher now. More businesses today seem to have free cash flow.

7/ One passage that sticks out in Robert Hagstrom's very new book on Warren Buffett ("Inside the Ultimate Money Mind") is set out below in an attachment.

I read Robert Hagstrom's new book in galley format and now am reading it again in hard cover. amazon.com/Warren-Buffett…

8/ People ask me about my strong interest in Charlie Munger's ideas. Reason: When everything financial was at its craziest during the Internet bubble Munger's ideas prodded me to sell more than half of my Internet and telecom stocks. Munger's ideas saved my ass financially.

9/ DMs are asking what Munger advice caused me to sell the stock. My answer is everything, but mostly rationality and risk.

This was after 1999, but apt: "When when the world is going crazy, put yourself in a position where you take risk off the table." morningstar.com/articles/16939…